You and your grandma are both deciding what bond to buy: -A U.S. treasury bond that has an 8% yield -A municipal bond that has a 6% yield Your income tax rate is 5%, and you'll buy the bond from a regular brokerage account. Your grandma's income tax rate is 10%, and she'll buy the bond from her 401(k) retirement account. What would be your best choices, respectively? a. Treasury; Muni b. Muni; Treasury c. Muni; Muni d. Treasury; Treasury

CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter4: Income Exclusions
Section: Chapter Questions
Problem 58P
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Ef 505.

You and your grandma are both deciding what bond to buy:
-A U.S. treasury bond that has an 8% yield
A municipal bond that has a 6% yield
Your income tax rate is 5%, and you'll buy the bond from a regular brokerage account. Your grandma's income tax rate is 10%, and
she'll buy the bond from her 401(k) retirement account. What would be your best choices, respectively?
a. Treasury; Muni
b. Muni; Treasury
c. Muni; Muni
d. Treasury; Treasury
Transcribed Image Text:You and your grandma are both deciding what bond to buy: -A U.S. treasury bond that has an 8% yield A municipal bond that has a 6% yield Your income tax rate is 5%, and you'll buy the bond from a regular brokerage account. Your grandma's income tax rate is 10%, and she'll buy the bond from her 401(k) retirement account. What would be your best choices, respectively? a. Treasury; Muni b. Muni; Treasury c. Muni; Muni d. Treasury; Treasury
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